Tax on your indulgences

A day of relaxation at the spa, working your muscles at the gymnasium or throwing a party at the local banquet hall — all these have become a part of our daily lives, something which many consider normal and, sometimes, necessary.

A day of relaxation at the spa, working your muscles at the gymnasium or throwing a party at the local banquet hall — all these have become a part of our daily lives, something which many consider normal and, sometimes, necessary. But the government doesn't think so.

The government terms these facilities 'luxuries' and plans to slap up to 15% tax on them.

On Tuesday, the Delhi Tax on Luxuries (Amendment) Bill 2012 was tabled in the Assembly. Facilities which will be taxed include banquet halls (or any venue where marriage, reception, exhibition and other activities take place), spas, gymnasiums and health clubs, hotels charging a minimum of Rs. 750 per day, per room. Currently, none of these facilities are charged luxury tax.

Also, all gymnasiums, health clubs and spas will have to get registered under this Act.

The bill proposes to impose this tax only on those establishments that have an annual turnover of more than Rs. 5 lakh. However, in case of hotels, there is no such limit and everyone will be liable to pay.

The quantum of tax to be imposed will be decided by the government.

Reacting strongly against the move, hotel owners said it will adversely affect their business and they will be forced to pass on the burden on the consumers.

Arun Gupta, president of Hotel Mahasangh, has threatened to hold demonstrations against the proposal.

"There was no need for a new tax on guesthouses, which are already paying taxes under a different head. We will first have a discussion with the government and if they do not listen, we will hold demonstrations," he said.

"A spa is no longer a luxury and we are burdened by so many taxes already. The government should reconsider its decision," said Simran Chhatwal, who runs a salon and a spa called Persona in the national Capital.

Voting on this bill will take place on Wednesday and sources said that the bill will see through as the majority is in its favour.

A senior Delhi government official said, "This will not affect the middle class as the bill

only aims at taxing those with bigger earnings. We are hoping to earn at least Rs. 10 crore through this exercise. We are not increasing the luxury tax but are only trying to include new areas."

With this move, the Delhi government, it seems, is trying to make up for the loss by withdrawing the proposal of imposing the Value-Added Tax on CNG.